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  <h1>Deside for a policyholder</h1>

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   <p>A common question is asking you to deside for a policyholder which option to choose</p>
   <ul>
     <li>It could be the choice of products
     </li>
     <li>The choice of benefit types.
     </li>
   </ul>
   <p>You can structure your answer as macroenvironment factors and microenvironment factors.
   </p>
   <p>It may be appropriate to choose a life-style investment strategy, when the value at the maturity is of interest. e.g endowment assuance, DC pension plan
    <ul>
      <li>in particular, at early durations, when the fund is low and there is a long time to
          make up any losses, a higher risk investment strategy may be appropriate (e.g.
          investing mainly in equities)
      </li>
      <li>however, as retirement approaches, the fund can be switched into more stable
            assets (such as fixed‐interest bonds) to protect the final benefit level
      </li>
    </ul>  </p>
    <p> The points to consider when conparing the products
      <li> Risk
      </li>
      <li> Potential gain
      </li>
      <li> Flexibility, with regard to the level of premium, the form of benefits
      </li>
      <li> Simplicity
      </li>
      <li> Transparency
      </li>
      <li>  Expense
      </li>
    </p>

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    Macroenvironment factors
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      <ul>
        <li> Regulation
        </li>
        <li> Tax regime
        </li>
        <li> Economic outlook
        </li>
        <li> Expectations of inflation
        </li>

      </ul>
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    Microenvironment factors
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      <ul>
        <li>
          Personal need: existing assets, future income, liabilities
        </li>
        <li>
          Alternative investment options.
        </li>
        <li>
          The insurance already in place
        </li>
        <li>
          Immediate need for cash
        </li>
        <li>
          Health status
        </li>
        <li>
          Job status (risk of unemployment)
        </li>
        <li>
          Risk appetite
          <ul>
            <li>in practice, this is largely dependent on the individual’s person circumstances
            </li>
            <li>main factors include age, wealth, marital status, children
            </li>
          </ul>
        </li>
        <li>
          Reinvestment capability
        </li>
        <li>
          Flexibility with regard to personal situation changes in the future
        </li>
        <li>
          Trade-off between gains and risks, expense and effort
        </li>

      </ul>
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    Constrains
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    <ul>
      <li>
        insufficient assets for direct investment in some asset classes:
        particularly property … although, many individuals actually over-invest in property as an asset class by purchasing their own home
      </li>
      <li>high expenses when investing small amounts
      </li>
      <li>high expenses when investing small amounts
      </li>
      <li>lack of information and/or expertise
      </li>
    </ul>
    In practice, collective investment vehicles can help reduce the impact of such constraints.
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  <p> Author: Mengke, Lyu</p>

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